Financial management for just married couples
- 1. Financial Management Tips For Just Married Couples
- 2. Why Financial Planning is Important? • Being newly married attracts a lot of financial responsibility, for which an adequate planning is necessary. • The assistance of a Certified Financial Planner or CFP professional can help to set up priorities and evaluate the needs young couples.
- 3. Time frame for Financial Planning: • Short term- Buy insurance, Accumulate savings (Income of 6 months is generally used as a yardstick), Purchase assets (car, house etc.), Incidental expenses (vacations, monthly expenses etc.). • Medium term: Realty investment, Children's education, Streamline retirement plan. • Long term: Children's higher education, Assess retirement corpus and liquidity, Estate planning, Expenses after retirement. Financial Planning for Newlyweds
- 4. Advantages & Disadvantages of Financial Planning • While being careful with your finances is important and financial planning is equally necessary, one cannot prepare expect life to turn out as planned on papers. • Financial planning for newly married couples assist in fulfilling the economic goals and easing fiscal burden, but preparing oneself realistically for sudden changes or disruptions in life is also important. • A strict financial chart for your life will bring discipline, but do not overdo otherwise you will miss out on several crucial opportunities. • For example: you had some investment plans done, but the one you finalized on is no more beneficial due to some changes in regulations of the investment tools. At that moment, you need to target the next best option than going ahead with chalked out plan.
- 5. Best Tips For Managing Finances Here are some tips for newlyweds to handle their finances: • Discuss your finances • Set monetary goals • Managing bank accounts • Chalk out a budget • Set monetary goals • Get-together to say ‘money’ • Take the right amount of risk • Create an emergency fund • Trust each other In following discussion, we shall elaborate in each of the tips suggested above.
- 6. Discuss Your Finances • Marriage works on honesty, and it starts with disclosing information about your finances such as any outstanding debt, how you expect to handle money etc. • Finalize the financial contributions both must make and which expenses are to be handled by whom. • Make sure you are open about your spending patterns. How soon do you buy monthly grocery? How much do you keep aside for leisure activities? • Compliment each other’s needs and work out a solution and try to balance of any economical deficits by controlling the expenditures. • At the end, always draw a financial plan to curtain unnecessary expenses and to add more to the savings.
- 7. Set Monetary Goals • It is never too late to discuss economical goals early in marriage. Do not wait until few months, but set baseline for financial status and jot down those financial goals in dept. • If you plan to start a new investment, take a loan, expand your savings or business- be it whatever monetary activity, make it an event where both can participate. • In case your partner disagrees, try to hit a compromise or bring in a practice of no meddling in each other’s financial decisions. Just promise to maintain transparency. • You can work as combined forces! For example- your partner takes care of household expenses and pays off debts whereas you manage the payments for extracurricular activities and build up savings.
- 8. Managing Bank Accounts • It is common for newly-married couples to open a join bank account. Combining accounts does simplify finances and help develop trust in marriage. Moreover, each one of you can add or withdraw money from a larger base of sum. • But if you and your partner prefer a level of independence, then you can maintain individual bank accounts. • Probably you can pool in money dedicated for common expenses in a joint bank account and the rest can be taken over to sole bank accounts. • Whichever decision you take must be done so with common consent to avoid strife and displeasure at the very start of marriage.
- 9. Chalk Out a Budget • Coming to a very important pointer- budget. We all have our own requirements and spending, and after marriage the responsibilities of finances increase • It gets very essential to draw a limit for the expenditures for various things such as food, house rent, clothing, home renovation, entertainment etc. • Start reviewing the expenses you both make or keep a note of the same over a few weeks so as to determine how much you need for different expenses. • Do not forget to save for taxes. Not paying taxes can hamper you and your spouse in many ways. • Allocate funds or irregular and unexpected expenses or spending that cannot be avoided such as regular medical checkups, payment of EMIs, insurance premiums etc. • It is possible that at the beginning you may exceed the budget, so we recommend you to be careful with the spending.
- 10. Get-together to Say “Money” • Now that you have better understanding about spending, know where you require that extra buck, and understand the need for sketching a budget, how do you bring all these into action? • It is simple, hold weekly or monthly meetings about the spending done and brainstorm ways on managing the same. • You do not have to make it a formal meeting. Probably, just sit back and relax over after cozy dinner and give two odd hours to talk about what you and he/she spent on through the week. • Make it a casual yet firm meeting. If any of you notice your spouse has overstepped the line, let him/her know in a loving manner that they must be more cautious. • Do not take any disagreements to bed. If there is a money matter that cannot be avoided to be discussed, take time to sort it out than mull over it the whole night.
- 11. Take the Right Amount of Risk • As just married couples, you both may have lavish dreams, desires that ask for quite good amount of monetary support. While it is vital to keep a check on spending, it does not hurt to splurge sometimes. • However, plan for whatever expenditures you make such as honeymoon, vacations, interior décor of your home, buying new stuff for house and each other, hangouts etc. • Like we said, be wise with your money or it does not take a long time to burn a hole in pocket. Never let expenses to mount to a level that you have to take a debt unnecessarily. • If you both maintain credit cards, be attentive to how often you use these. • Sometimes you may want to invest at places that offer faster returns, and as married couples who are just looking at ways to ease their finances, tricky offers may seem enticing. • Verify any investment schemes, spending, promises by merchandisers etc, before you trust them with your pennies.
- 12. Trust Each Other • Trusting each other not only through nitty-gritty situations, but also on finances will bring peace and love between spouses. If you can rely on your spouse that he/she will not make pointless expenses, then half of your economical worries are solved. • We understand building trust takes time even though you have known each other since before the marriage. What we recommend is, start working your finances as a team. Observe where both of you have to spend and where you can restrict spending. • Appreciate each other on contributions made in every way. Surprise your spouse with small gifts, it can be something as simple as card with few lovely words. • All these may seem way different in financial management subject, but do trust us when we say that relying on each other takes more than just sitting together talking about money. • Be open to listening out to opinions, something these can help you make important financial decisions.
- 13. Create an Emergency Fund • If you do not have an emergency fund already, do make one instantly. Here, you both must set aside certain amount of money to handle any untoward expenses, such as in case any of you lose their job, urgent repairs, natural diseases, illnesses and similar circumstances. • Do add on to the emergency fund constantly and build it over time. These act as savings that you should disturb only when unavoidable crisis or situation arises, and you have no other option but to look this way. • At the same time, be careful to not unnecessarily empty out emergency funds. For example, if you have a huge expense, but do not have cash to manage it for the moment, you can take a loan instead of spending from the emergency fund. • Also if you choose to take finance, be sure to regularly pay off the installments to escape from additional economical burden.
- 14. Remember, Sharing is Caring and You Have Many Adventures to Explore! Peace-Love-Happy Beginning